Mortgages actually not in forbearance

[Russell Gronsky]

When the forbearance announcement came from the Federal Government, I was curious about the details of how it worked. So I called several banks that hold mortgages for my residential rentals and asked how their programs worked.

To be clear, I didn’t ask for forbearance, I just asked about the details of how it works.

Earlier this week, I looked in my credit report and found that 2 of the banks I spoke with reported a note to the credit bureaus that my loans with them were in forbearance!

When I called the banks, customer service from both banks told me they automatically enroll people into forbearance right now, even if you just call to ask questions about the program.

Please look at your credit reports and make sure there aren’t notes on your loans from forbearance that you didn’t ask for.

[Kevin Romines]

Yes, we have heard of many lenders doing this. You need to take the steps with those lenders to have them correct the credit report. If you don't, it will look like you are in default and you wont be able to get new loans until it is cleared up. 

The most recent thing we have heard from the FED's is that they are now requesting that the servicer's put the missed payments at the end of the loan. Up until recently, FHFA (regulators of Fannie and Freddie) were refusing to buy any loan that went into forbearance. However recently they announced that they will buy certain loans (Owner Occ. Purchases and Owner Occ. no Cash Out Refinances) and that anyone who has been in forbearance would have to had brought their loan current and have made 3 monthly on-time payments, to then be eligible for a new loan. 

However, many lenders will have overlays that are much tougher than Fannie / Freddie guidelines, so it could be tough to find a lender that will do the loan even if you have brought it current and made the 3 on-time payments. So when searching for your next loan, it could take a while if you had forbearance in the past?

Bottom line, Forbearance is a last resort tool that can be used, only if you truly cant make the mortgage payment. Pay your mortgage if you can!!!